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Robert Pollin Education. (2013) 'Back to Full Employment.' New.

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  CSPAN    Book TV    Robert Pollin  Education.   
   (2013) 'Back to Full Employment.' New.  

    March 17, 2013
    12:00 - 1:30am EDT  

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>> hello booktv rubber pollin argues the u.s. government should be pushing for less than
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4% unemployment also notice lute lute -- full employment of policy he says is abandon the 1970s when concerns about inflation began to take precedence. it's about one hour and 20 minutes. [applause] >> thank you, joe. i am happy to introduce bob. bob pollin is one of the leading economists in the united states. heterodox economists are the best kind. they are the ones that think outside the narrow box of orthodox economics. bob is a professor of economics at the university of massachusetts and codirector and co-founder of the political economy research institute at umass, a very important research institute backed does excellent academic scholarship with a
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public purpose. bob's books include a number of looks, contours of descent on the u.s. economy and in 2003, two books on the living wage, 1998 book of the living wage, building a fair economy and a reasonably measure of fairness, the economics of the living wage and his most recent book is the topic for tonight, "back to full employment." i just want to add that bob's work on the living wage has been very very important. he has been probably the leading researcher on this important issue. has written numerous papers and reports in addition to his books
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and has traveled to cities across the country to speak about the living wage and has testified before many city councils who were considering a living wage proposal and i think this is a really important contribution and i just want to acknowledged that. bob's recent work is focused on the green economy and the achievement of the twin goals of sustainable energy and full employment. there are numbers of reports on this topic in this worked on green projects for the u.s. department of energy and the international labor organization and is currently directing a green energy project for the u.n. industrial development organization. bob's talk tonight will be based on his latest book, "back to full employment" and i just want to add a little context here.
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and that is that the unemployment problem in the u.s. is more serious than it appears from the official government statistics. the main reason why it's official and the reason it unemployment has declined in recent years is the official estimate of the labor force has hardly increased at all since 2008. the population growth has just stopped. but what what is happening is that jobs are so scarce that millions of unemployed workers have given up looking for a job and they are not counted in the official government statistics. if we just as an exercise assume that the labor force over the last several years has grown at a normal rate, then the rate of unemployment would be three or four percentage points higher than the official 7.9, more like
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12%, clearly in double digits. and that is serious. and i think the unemployment rate is going to remain double digits for the foreseeable future unless the government provides some major job creating initiatives and bob is going to tell us tonight how that can be done. join me in welcoming bob pollin. [applause] >> thank you thank you very much fred and thank you very much john. i'm very happy to be here. i guess the plan is i will just warm up and talk about what is in this tiny, tiny, tiny book. a little bit of some overview and then we can have some discussion. so while fred took all of my
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good lines there but the magnitude of the unemployment situation today is really unprecedented since the 1930s and it is not as fred says respect the data, at least the data in the headlines. so as fred said, what we aren't measuring when we say 7.9% or the number of people that are not trying to get jobs immediately because they have become discouraged and it also is not including people who want full-time jobs but only got very part-time jobs. the labor department does count these people. they are just kind of buried and statistical stacks and if you take just those two groups, the people who want full-time and maybe only got two hours a week
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and they got five hours or 10 hours and the people as fred said he worked his courage to, the unemployment rate today officially is not something i made up, it is 14.4%. not that 7.9 isn't bad enough but 14.4, now 14.4% as 23 million people. just to try to ground out a little bit, if we think about the population in the biggest cities in the country starting with new york, l.a., chicago, houston, san diego. it's in the book here but san jose is 10, odalys. anyway take the 10 biggest cities and add up their entire population of all the people in all of those cities, that's 23 million people.
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that is how severe the unemployment crisis is. and again there is no precedent since we got out of the great depression. so, another statistic. we had this thing we now call the great recession and the have followed the wall street crash that was caused by excessive speculation on wall street. now according to the official marketers of when recessions and, the recession started in the last three months of 2007 and it officially ended by june of 2009. that's three and a half years ago and we have been out of a recession for three and a half years, officially. now, one thing i recently calculated is, let's look at this recession relative to all
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the other recessions that have taken place since the great depression. now, and all the other recessions, there are different experiences that the economy does bounce back. when you say the recession and, it actually really ends. you can see that in the statistics and on average, the unemployment rate for the other recessions, sometimes are severe but the unemployment rate in the other recessions averaged three years out. it was 6.3% and in this recession the average, the three years after the recession ended with 9.2%. so for the three years and i'm not talking about the recession itself. i'm talking about after the recession ended, it was 9.2% as
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opposed to the previous experiences including 1988 was very severe but then we came out of it. 6.3%. now the difference, if we actually have a 6.3% unemployment rate today instead of the average of 9.2, officially that's 4.5 million people that would have jobs now that don't. so we have a very severe problem by any measure and everybody knows it. the presidential race, romney was talking about it and there is of course the question of what you do about it. so, i will mention a few things about what to do about it at first let me make a couple of points. the first is -- this is a very simple thing. why do we care so much about unemployment and i think
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everybody knows the answer but it's worth saying it anyway. people need jobs. most people are not independently wealthy and therefore they need jobs. it's they themselves are a member of the family support so it's important that they have jobs. jobs are basic in terms of money jobs are also basic in terms of people's stability and the stability of the family, the stability of the community and a sense of self-worth, being integrated and community life. if you don't have a job you spend all of your time worrying about the fact you don't have a job and makes it much more difficult for you and other members of the families to function in any kind of normal way. so, jobs are intrinsic to well-being. they are intrinsic to material
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wealth but they are also intrinsic to psychological well-being and your participation in the community, to family stability. so when you have mass unemployment it eats away and really destroys the major fabric of society. that is what we have experienced since basically 2008 when the great recession started. so, i will get to on what to do but i want to mention monitor the thing which is the idea about fighting for unemployment is highly original to me. i don't want to claim any originality at all and in fact it was pretty commonplace mainstream orthodox idea for about 30 years coming out of the great depression in the 1930s. the idea was basically the
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capitalist economies coming out of the 1930s knew that they could not survive another great depression and the legitimacy of the system was being destroyed if you couldn't provide something he can to decent employment opportunities for people in in the society. so full employment he came a centerpiece of economic policy coming out of the 1930s and remains there. the central organizing idea. government became aware and some were more or less committed of course but the idea of providing these jobs was really the whole advent of mainstream macroeconomic policy was organized around this idea. how can a society get the full employment and stay there?
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there was a lot of debate to whether this was viable, whether it was desirable and over time the idea emerged that well with the government should do is worry about inflation. that is the more serious problem and unemployment will take care of itself. and this is what some of us call neoliberalism, the idea that if people don't have jobs than go out and bargain for yourselves with a potential employer. if they don't want to hire you, lower your wage and eventually somebody's going to hire you for the value that you are worth to them. that is how you achieve full employment. it's derived entirely through what will happen through bargaining in the market. and that idea has prevailed. that idea overtook the notion that society should build full employment economies and
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government policy should care about this. so what we have, if you want to set a date, really since the beginning of the reagan administration in 1981 and the late 1970s, you have the really decline of the idea that government policy should be focused around achieving full employment and the emergence of the idea that if government tries to do something they're just going to mess it up. so government should worry about keeping inflation down despite everything else in and along with that was the idea that let the market decide how financial operations take place and deregulate the financial markets. that is what led to the speculative bubble and crash which in turn created the great recession.
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so that is kind of the background to what my book goes through in some of that background. very briefly, a very short book so i tried to compress things a lot. but that is the basic background. now, how do we think about where we are today? first as fred said and i reiterated its very important to realize how severe the problem is and it's not just that we can think about jobs or no jobs. when i say full employment nine mean full employment and a decent wage and a good job. that's also crucial to recognize because even before the great recession, even before 2008, we have experienced another crisis in the job market which is that the average wage for nonsupervisory worker has actually gone down for 35 years
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or at this .40 years. people find it hard to believe but actually, and these are official statistics from the u.s. labor department. the average wage for nonsupervisory work after controlling for inflation so we control for inflation, was about $20.70 per hour in 1973. and today it's about $19.60. now, this is over a period when productivity, the average amount that the worker produces if you are going to work over the course of the day, how much does the worker produce? again the official government statistics according to government statistics of the average worker produces about twice what she or he did 40 years ago. so the average amount produced
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over the course of the day has doubled roughly whereas the average that the worker gets paid has actually declined by eight or 9%. when you hear about the rise of inequality in society, this i think captures it very well. the fact that workers have not been getting the benefit of their own productivity for basically two generations. moreover, i have a graph on that one. i turned right to it. it's tiny but there it is. that extreme rise in inequality also contributed to the financial crisis, because if the pie is doubling that workers aren't getting any more, the money has got to go somewhere.
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it's going to the top and because people at the top were getting so much more proportionally, that created the opportunity to gamble more so there was speculation in the financial markets. it was regulated for about 30 years but the market was regulated and at the same time you have massive amounts of money proportionally flowing to wealthy people who then concluded accurately that at least some share of what they have.they can gamble it because even if you lose five or 10% you have so much more left than you might have had in the previous historical period when workers got better wages and a better share of their overall what they themselves were producing. those are the two points in terms of getting back to full employment which is jobs yes but
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decent jobs too, good jobs and we can talk about some of the politics of how you get there. we have true experts here that know more about this than i do. i do. so let me just throw out some policy ideas than i want to think about short-term over now the next year or two years and longer term. in the short-term we are having the wrong debate in the country. i'm not saying the details of the debate are wrong. we are not even asking the right questions. the questions should be full employment. the question being debated instead and i don't know what he's talking about in a state of the union speech but i will bet the government is spending more than its taking an and the deficit has become the focal point of all this whole crisis,
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the fiscal cliff and now we are talking about these automatic cuts, the so-called sequester social spending and military spending so we are not even talking about the fact that what are the tools of the government has to promote a return to something like a decent level of employment opportunities and a decent wage? it's not even the main discussions discussion so the first thing we need to do is shift the discussion. the fiscal deficit i will just say is relatively large historic wade, it is but the reason reason its large first of all is precisely because we have the recession. because when the recession hit that means people's incomes went down and when their incomes went down that means how much they paid in taxes went down to the
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deficits automatically got bigger and on top of that we did run a stimulus program to counteract the magnitude of the financial crash created by wall street. so that is why we have a big deficit. now, the point though is that even with the big deficit, we do not have a fiscal crisis today. we do not have anything close to a fiscal crisis and i will give you a statistic that i hope conveys that i will explain why. we hear over and over and over again that we we are in this desperate situation. the amount that the government actually spends on covering its debts its interest payments today is actually had a historic low, not at a historic high. i know people find that hard to believe but it's it's true. again strictly from government statistics. today or in the last year the government paid 7.7% of its overall budget on interest
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payments. under ronald reagan, the great conservative icon and his successor george bush the first, the government was paying 17.2% total expenditures and interest payments so we have gone from 17.2% under reagan and bush 127.7% today. less than half so how is that a crisis? the answer is it's not a crisis. why is it that we have such low interest payments even though we are borrowing a lot and again it's reasonably simple. if you wanted to buy a treasury bond, a five year treasury bond today, the interest you would get on a treasury bond is 0.7%. treasury bonds are at historic lows so you can borrow and borrow and borrow but if the interest rate is less than 1% you are not accumulating obligations at a significant
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rate and that is where we are. now i'm not saying that the interest rate is always going to be so low but i'm hearing from the most renowned so-called deficit hawks like martin feldman at harvard and john taylor at stanford, the biggest, biggest names who have been arguing that we are deficit crisis they have been saying that the interest rate is about to shoot up. they have been saying that now for four years. eventually they may be right but at the moment they have been wrong for four years and meanwhile we still have the jobs crisis. so the government has a lot of opportunity to spend on important things to create jobs. number one to help the long-term unemployed to extend that unemployment benefit. that's not just a chair at a program. help people get back on their
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their feet and get decent decent jobs but also keep spending in the economy more stable so it actually helps stabilize what would otherwise be a more severe situation. on top of that state and local government needs to continue to be supported. state and local government duties three things education health care and public safety all vital and these are areas that have been cut. it's also true that state and local governments are the biggest single source of jobs and the whole economy collectively. so if you are going to keep cutting state and local government of course you're not going to get out of the jobs crisis. so we need to support them. we need to invest in traditional infrastructure and i'm going to focus on this a little bit more. we need to focus on the green economy and building up the green economy. in the short-term it creates a lot of jobs and the long-term it addresses the climate crisis.
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so let me talk a little bit more about that. in terms of the short-term policy, i will mention one other short-term issue which is the federal reserve, that controls the short-term interest rates have have been running what they call a zero interest rate policy now for four years. that is the interest rate at which banks borrow is zero. they get free money and they get as much as they want for free. on top of that actually if they take the money and all they do is bank it at the fed, they get one quarter of 1%. it's not a lot. it's one quarter of 1% but if you could borrow a lot you know and getting back for doing absolutely nothing, that is what they are doing. right now also something that is frustrating to me that is not an talked about enough, commercial
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banks in the country are sitting on $1.5 trillion in cash, 1.5 trillion to give you some sense of that. the total u.s. gdp is $15 trillion for 10% of u.s. gdg in the bank's, money they got for free doing nothing. so another policy which i talk about in the book is you must tax the banks to say you can't can't -- do we have given you money for free and we have bailed you out and you were getting at quarter of 1% for doing nothing so let's push them to get the money into the hands of small businesses and let small businesses grow. so that is another short term policy that we could do. even if the republicans would want to do it -- though they should want to do it because it
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would be good for small business but even if they didn't, the federal reserve could do this on its own. it has been talked about even by conservative economists because it's so egregious that we have a zero interest rate policy which by the way, i'm not even against it. what i'm against is giving it to the banks and then letting the banks do nothing and just sit on it. that is where we are in the short-term. over the long term i want to mention this point of the green economy and i think obama is going to talk about that in his state of the union. and that is all to the good because we neglected to all throughout the campaign and the reason he neglected it and i'm not privy to their thoughts but it's obvious the reason is people have become convinced that okay we want to support the
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environment and we want to fight climate change but it's a job killer in going to be bad for jobs. jobs have to take first priority. obama himself has said such. the fact is not a job killer and it's actually good for jobs. fred was nice enough to mention some of my research on men and that is the main conclusion and the i summarize the briefly in the book. let me give you a little sense of that. first of all logically, why should it be bad for jobs to invest in building the green economy? it's investing. we are building. people have to do things. that means there are jobs. on the one hand the right always says when we talk about cutting military stand spending you can't cut military spending or you would lose jobs. well if you spend money building up the green economy and investing in energy efficiency
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renewable energy then why wouldn't that be good for jobs? conceptually doesn't make any sense. you would think it would be bad for jobs. now let me give a little statistics on this. i am sorry, i'm an economist so numbers just start flowing out and i cannot stop them. this is a big finding from my research. these also entirely based on u.s. government statistics. if you spend a billion dollars on investments in the green economy and by that investing in energy efficiency is like efficiency in buildings, efficiency in industry, public transportation, improving the electrical grid system so it's able to operate on solar and wind power and so forth and best in energy efficiency and
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renewable energy so building up solar power, wind power and geothermal power to some extent, hydroelectric, small-scale, you are going to create 17 jobs for free billion dollars you spend. i contrast, if we spend the same million dollars on maintaining the fossil fuel economy and nuclear power, you create five job so 17 jobs versus five jobs for the same amount of money here. so you get roughly three times more jobs per dollar of expenditure every time you shift in million dollars out of the fossil fuel economy and into the green economy. the green economy is good for job so it is a short term probe ram investing in it and creating jobs immediately and a long-term program because it's the only way that we can get to some level of ecological sanity to
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maintain and build a green economy and fight climate change. so another statistic along these lines on this notion that you need military funding, spending on the military in terms of jobs creates about 11 jobs per dollar of expenditure whereas as i said the green economy is 17. education actually is 27 jobs per million dollars in expenditures so when we talk about cuts and as you know with this deal, this fiscal with sequester deal, it's supposed to be half of the social spending and half out of the military but as we speak what we are really talking about our ways not to cut the military and load all the cuts on to social spending. education will create 2.5 times more jobs so when we talk about the jobs we should say if there
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must be cut to guess take them out of the military, take them out of fossil fuels and put them into the ring economy, put them into education. that is how we invest in the long-term future and that is really what we talk about security. in our society that means we have got to control climate change and we have to educate young people. that should be the strategy. so the long-term strategy of doubling of the green economy and creating opportunities and education is also the best strategy for creating jobs in a booming economy to full employment. so back to full employment, there's a short-term way to get there and it's pretty straightforward in technical terms. there is a long-term plan for sustaining a full employment economy. what we really need to do is get the politics localized and that
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means not just fighting against the republicans but we have to get the democrats and we -- what we really need to do is build up at the ground level at the grassroots and whoever the politicians are to start to it in bed again in our society full employment as the fundamental future of how we function. so i will stop there and we can have a discussion. [applause] so, yeah. >> i know 30 or 40 years it was at 5% and when clinton came in it was that or%. what would you consider to be full employment? >> very good question. the idea that we can't keep fighting full employment because once we do we get to uncontrollable inflation.
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the reason behind that is that when the unemployment rate goes down a lot, workers get more bargaining power and when workers get more bargaining power they will bargain up their wage and businesses will pass on those extra crosses they are burying to their consumers and that is how you get inflation. now, really there's not a lot of at what -- evidence that works. it's one of these things that works for years and that it doesn't work for a few years. for example the late 1990s we had very low unemployment and we had almost no inflation. in the 1960s we did have some trade-off. in the 1970s we had very high unemployment and very high inflation. in that period is when the whole idea kind of blended threats that the government can't worry
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about unemployment that inflation in the 19 70's was the oil prices that tripled in 1973 and 91979. that was the source of inflation. it was not workers having more bargaining power. i think workers should have more bargaining power and i just said 40 years on average, essentially 40 years without the average worker getting a raise. by the way that is historically unprecedented and this is before the crisis in 2008. this is the fundamental transformation of society that workers don't get the benefit of their own improvement and productivity. so now, what is the number? it doesn't have to be zero unemployment access there are always going to be people between jobs that we call
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frictional unemployment. somewhere in the range of 3.5% unemployment charlie 3.5%, not just the narrow number but truly 3.5, somewhere in the range of 3.5% and everyone else is going to be between jobs. and the reason i say that is what we have seen, you know we were below 4% unemployment in 1998 briefly and in the 1960s we went for years at around 3.5%. what happened? workers did get raises. in 1997 and 98, it was the only time and you can see the picture in the book over the 30-year period all of a sudden workers would get raises and especially with workers in the lower 20% of
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the labor market got the fastest races. so that is good. i see that it's a good. will it cause cause inflation? it might cause a little but that's not a problem. if the inflation rate goes up to three or 4% and we are operating in a full employment economy that is safe posited. if inflation is caused by speculation in the oil markets which we now have also, that's bad so we have to understand the source of the inflation but that's my idea of where practical full employment level should be. >> productivity gains for way up but if you get more money you need to produce more and that is one reason inflation did lead to high -- in the 90s.
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>> the races in the 90s, ken just looking at the picture hers were very brief. because on this low unemployment rate it was very brief. and you can ask, well what happened? actually was a result of the previous financial bubble the so-called .com bubble where there was a lot of investment in the economy and a lot of borrowing and a lot of investment and the economy became turbocharged for a couple of years. what i'm trying to get that is looking at ways that we can get to that level of activity that will create a lot of jobs without relying on a financials to give bubble and that is where he think investments in the green economy can be very important. >> when you measure that in the economy -- [inaudible] >> right. that's exact way it.
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>> in addition to always you laid out do we also need -- >> over time i think that is a desirable policy but right now i know that is a suggestion and i know in germany that is part of the way which the unemployment rate is here but i think if we put a lot of stress on that particular thing then that is going to be taken and we don't have the capacity to create jobs so here are the number of jobs in let's just chop off the hours and people are going to have less time and they are going to make less. right now i don't see that as a really good solution. >> i was wondering if you could talk about the specifics about policies around the green economy?
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is it mostly the government or private? >> i think it's both because a big part of my thinking on the green economy is about efficiency. it's not just about solar power and wind power. for example buildings, buildings are the biggest source of energy consumption in society and our buildings operate at very low levels of efficiency. the technology to raise efficiency is not fancy so retrofitting buildings and things that can be done on the shelf technologies that we don't have to think about like solar. a lot of progress which of course i favor but in terms of investing in building efficiencies all the technology is there and the average investment in a retrofit pays
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for itself in three years because you get, you reduce your energy bill. so in a way you don't really need the government to subsidize that. you just need to organize the financing so people don't have to put up all the money and put up all the risk and the return comes back. that is one big part of the overall picture. banks could do that, yes and the other thing is we should be retrofitting each and every public building. that is good for the tax paid and their there are sablan the books of past in 2007 because george bush was president and he signed the bill. it said that if i can get a fix that ,-com,-com ma 75% of all the public buildings are mandated to be retrofitted by
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2015 to achieve i think it's 35% efficiency. it's a law. i don't know about the -- zonal enough about the ins and outs of washington, when you ask a lot don't you have to do something? so it is happening, it's a law so that would be important and it would give benefit aside from environmental benefits, benefit to the taxpayers because you would be paying 30% less for energy for all the government holdings and it would set off the market in spill into the private market. people would think about it more. in terms of renewables, another thing people don't know is can the energy department. the u.s. energy department said i 2017, wind power to generate a kilowatt of wind power's going to be at parity with coal and it's going to be cheaper than nuclear power.
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this is not me. this is the energy department. now solar is more expensive but solar has also been coming down very dramatically so it's not bite 2017 and some people think it will be but solar power will be a parody. the only source of energy at which renewables will not be across parity is fracking, natural gas. this technology fracking, guess it does rollout natural gas from shale rock very cheaply but it is an environmental disaster. so if we are looking at a cheap energy future we can do just fine with investments in efficiencies and renewables if you put aside the fracking. that is really i think going to be a big struggle in the future. i know that the obama
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administration they are for investing in the green economy but they are also for all of the above including especially cheap natural gas through fracking and there is no way -- go ahead got another book if you will let me come back, let me summarize it. there is no way you come close to meeting the commission reduction target through greenhouse gas emission targets. if we do anything like maintaining our existing level of consumption of coal, oil and natural gas. no way you come close. if you take the climate scientists and very seriously which i do, basically we have to cut consumption of all three, coal, oil and natural gas by 50% roughly, 50 or 40% within 20
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years. how can we build up this fracking industry? forget about the fact that it's contaminating the water. and it's creating volcanoes. let's just put those aside. just on the climate effect, you just can't do it. therefore the green economy is an imperative and an environmental imperative and it so happens it's good for jobs. >> i have to agree with you on the energy savings. i work for a nonprofit and we have affordable housing. there is tremendous gain that can be made by retrofitting buildings and insulating and air sealing them and tends to employ people at a semiskilled level and people at the city centers. you may find it a subsidy i
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think. >> you have to get it started. it's very frustrating. fred and i earnest profession economist that somebody 200 years ago dubbed its abysmal science. it's all this naysaying and nothing good is going to come. the engineering evidence on the benefits of energy efficiencies, again i have this all coming out in one of the things i said in this other book is a lot of what i just read is studying the national academy of sciences called real prospects for energy efficiencies. it's not the heterodox economists talking. this is national academy of sciences calling together all the best engineering research and basically what i told you about that benefit to efficiencies are linked to the
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national academy of sciences. on the other hand you have the economist who say that's engineering. engineers don't know how economics really work and the main argument from the orthodox economists is that people don't want to do this. there is risk, yeah there is risk in there is hassle. if you have a commercial building you have to let these people in and they have to do their thing. who knows, they could be thieves and therefore there is an article in one of the leading academic journals of economics that says there is no benefit. there is no benefit e-rate forget all the engineering when you take into account these other things there is no benefit my response is if there is scientific evidence that is there than our job is to think of ways to overcome whatever
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problems there are in terms of financing and in terms of hassles and building up the market. that seems to me to be the right economic answer and so things like you are doing in your community, as that spreads people accept the idea yeah we should retrofit our buildings just like what will be happening is that cars are going to be getting twice as efficient over the next 15 years and they are going to be more expensive. people are just going to get used to it and then they will see yeah you are going to pay $3000 more but then you are going to get $1200 a year in savings and saving in savings that will pay for itself in two and a half years. >> in your earlier thing about the difference between the productivity gains in the wage levels how are we selling the output? where is it going? you know, the upper classes can
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be consuming half of the economic output and so does that mean that we are condemned to death to debt to clear all this? >> well household debt up until 2008 crisis basically doubled as a share of household income from the 1980s when it was 50% of household income and by 2008 at was over 100%. so people were living beyond their means. part of the way they did that was we had you now the housing bubble and house prices were going up so that meant people worm more wealthy on paper and tape or second mortgages and that enabled them to sustain living standard and access of their income. another way of course was more than one job so i am talking about the average wage for one job. if you double up you have two
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jobs and they are low-paying jobs so that was also starting to become customary. and then the other part of it is yeah the level of consumption, of course there's only there is only so much they can bite but consumption became much more of a focus. the rich became -- being rich didn't just mean you had a nicer house in a nicer car that you had a private plane and all of those things that actually do add up to a significant level of consumption. >> how much should the government subsidize companies? i think solar companies like solyndra -- >> i'm glad you asked me about solyndra. i was in his e-mail exchange with somebody who was a very
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good journalist they probably have some of your books. i won't mention her name but she wrote me about this yesterday. she said i can't believe you love this stuff. fred mentioned that i was consulting with the energy department and i was consulting among other things on a project and solyndra got it. here is the story. the program was to give out loan guarantees to big companies that were investing in renewable energy. there were 24 companies. they did not get loans from the government. they got loan guarantees meaning that they got private loans they had to pay back only if they fail to pay back. so there were 24 companies. three of them had defaulted solyndra being the biggest. so the total amount of loan guarantees was $16 billion.
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of the three companies, at up to three companies the amount that the government was on the hook for out of $16 billion was $600 million. so it was about 6%. on top of that, when these companies defaulted like solyndra, the government takes all all of their assets and then they can sell them off. they have holdings and they have machines and they have land. so basic way the government was on the hook for $300 million. so let's say it's a 300 million-dollar program that led to $16 billion in investments in the green economy. this was a successful program. when i was -- the main thing i was doing with the energy department was they showed me this long list of specific projects under the
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stimulus and they said if we spend this amount of money how many jobs are we going to get out of the stimulus money and not surprisingly the best way to spend the money was through the loan guarantees because most of the time the loans don't default so basically the government spent $300 million got $16 billion worth of new jobs. this is a really good program. so yes there are going to be failures and of course that is exactly why you have a loan guarantee because there is some risk. but even with some risk, 90% of the time the program succeeded. >> you said you were a consultant. how do you determine who gets a loan? do you have financial statements? >> i will say this. this was a big program and a new the new program. it was more of a commitment on
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this green investment program that has actually ever did been done in u.s. history and i was sitting here talking to these people and doing it. heart of the problem was that it hadn't been done before. of course there are going to be mistakes and of course it's difficult to scale up. under bush it was like a billion so the stimulus is $90 billion or you go from 1 billion to 90 billion. naturally there are going to the start of difficulties. for the most part though the programs were succeeding. and including this one. so it's gotten terrible price. i tell the story in this new book -- the trouble is i hope this book is readable. the other one is not. i've got to rewrite it to make it readable but i tell the story and i'm dying to put it out. i've got to wait until my
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publisher wouldn't like it very much if i started giving all the details before the book comes out. salanter was successful. salanter itself failed. the program under which salanter got its loan guarantee has been a success. >> i would like to follow up on that because it seems like some of those might be the investment in the absence of the -- so it seems like the total 16 billion, should that be scaled back and what fraction of that would have happened without intervention and what more could have been done if more money was on the table for companies? >> i don't now and that's a very good question. that is one of the criticisms. the banks made a loan with a loan guarantee and they would have made a loan without a loan guarantee. you do have to try to judge that it for the most part i think this is a good way for the
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government to leverage its financial capacity. it's a lot less expensive than directly spending. i should mention in terms of renewable energy, the biggest level of activity in the u.s. economy today or maybe in the world today in terms of her noble energy i have to say is the u.s. military. the u.s. military and i think there are serious has committed to having by 2025, 25% of all their energy coming from renewable sources. and they are doing some fairly innovative things and it's not all government spending. what they are doing our multiple things, private firms. you build up the solar, and then we will buy it from you and we will have a long-term contract
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and buy it from you. that is going to a think become very significant. if we look at where innovation has taken place in this country, since it's founding a lot of it has been tied for better or worse to the military in one example that i would mention that is quite pertinent for the moment is the internet. the internet came entirely out of the u.s. military investment. it was subsidized in a major way for 35 years so when bill gates says hey the internet came from private initiatives, that's just bull. it's a technology that was developed by the u.s. governmeny by the u.s. taxpayer and then handed over to the dirt. something like that, it doesn't
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have to happen through the u.s. military but something like that should be happening. so the salanter case is a smaller example of a very positive program. one solar power and wind power are in costs. he and they won't need take subsidies. again we will need to build out the market and people have to get used to it. we hear a lot about solar power. do you know how the proportion of overall energy in this country supplied by solar power? how about like one quarter of 1%? it is miniscule. essentially if you say we are going to build out a renewable economy we are almost starting at zero, so all the good ideas, it's miniscule. wind is a little bigger.
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the biggest source of renewable energy right now fortunately is corn ethanol and that is no improvement relative to fossil fuels. >> which government agency -- is that the department of energy? >> the department of energy did this one for renewable energy projects. ..
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the. >> they have these projects we talk about with the military which the utilities were forced to buy renewable power at a fixed long-term price of investors, not just big business but it smaller cooperative community development to put in the
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wind turbines even in cities. they invested a and the people knew was not a risk at a fixed price and they knew the market and that idea started in california. basically the consumer is subsidizing. the government said this is what you have to do. you have to buy this power. when power is close to parity so there is no subsidy. they build up the market. >> what about productivity? >> to me this is a classic
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picture what i understand to be marxian economics that workers don't have the bargaining power and business owners get a higher share of overall product. the more they have the bargaining power the bigger the share. so over the last 35 years this occurred it was not expected or understood. for example, the most prominent economist is paul krugman in the 1990's i can think of no example in human history in which wages don't
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go up with productivity. meanwhile not know what is happening under his nose. i don't know if krugman still believes that's but basically workers lost bargaining power. by? a big factor is globalization, not per se but under the new liberal regime not to support workers' rights to bargain, support unions or a living wage. so maybe you should talk a
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little bit about this if workers say we want ewes and businesses say we move to china. they just have to say we're thinking about it that gives less bargaining power. these take place for the most part within the country so they don't have the same leverage. do want to talk about wal-mart? >> i believe the rich get richer as far as wal-mart. ask me anything i could probably give you the
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answer. right now we have strikes on black friday no wal-mart tells us, i belong to an organization called our. then know it tells us the employees that it no longer exists and if they discuss it they are fired. >> which is illegal. >> we don't have the full labor relations board. obama tried to fill the
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seats in the supreme court overturn that and it is illegal. >> and star anise unionizing because i have been working for wal-mart 13 years when i started i was in one department high-tech care of my department. now i am a cashier but i have to work five other departments i get just as much pate now as a few years ago. but prices keep going up but my pay is not going up.
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in canada at they became unionized than one store at the following day here in the state's the butcher were cutting the meat, they unionized. there are no longer any meat cutters it will mark. is now frozen meat. that is why i say the rich get richer. the six waltons' are the six richest of this country. but the government doesn't do anything about it.
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something driving me up a wall is wal-mart made a big deal about hiring the best. these men and women risk their lives for their country. wal-mart offers them jobs but wal-mart does not hire full-time anymore. they offer part-time jobs at low wages. they risk their lives for their country. >> and they got a great publicity.
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at the lowest point* in 97 years who will stand up to fight for this? and over generations if they can get away with it they will. that workers are treated with respect in the full employment economy and by the way rich people still live very nicely. with. >> about defense contractors? how do transition from that specialized work to those that take the skills with them?
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>> some boring technical studies, we do go through that. the type of skills required to expand in a green economy are not that different than the type they're required with the military. of course, they would transition. as we focus around job loss to cut the coal industry in half but there will be more but thinking of transitions in a fair way. this is a good insight.
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it was a superfund how about four people? >> what about the living wage? it is different for different communities but $13 an hour is a good minimum living wage. there is a proposal know for raising the minimum to 10 which is lower after corrected for inflation, the rock rock-bottom minimum
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what they paid 1968 in today's dollars is over $10 an hour. i am not talking rows santa monica california but to if you are 16 years old walking into mcdonald's in east texas, they had to pay $10 an hour. that was the law. to say we get to $10 an hour it is not realistic. it isn't talking about progress or the level of regress we have experienced. i said 13 because my colleague did some research
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and ask the question there is a point* if you keep raising the minimum there will be some discouragement and she thinks the cut off is $13 per hour for. >> these prices? >> it could a little bit. >> i was reading an article about waitressing. they make $2 an hour or something like that. if they had a minimum wage, it would cost us $0.10 more. >> that is a lot of my research and with those comparisons were.
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>> i am going out to dinner not thinking about how much i am spending for crime spending $12.90 for a meal today and tomorrow it cost me $13 but the waiter or waitress makes a decent living wage i don't think $0.10 over meat or anybody who goes out for dinner. >> i did a comparison of studies in different cities and one was santa fe mexico with the highest living wage standard in the country was part of the project the what happened.
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there was a trial but while i was there before it was implemented, because some restaurant sued to say it was illegal. book those seem people had the gall to say this is unfair because now i lose customers because said ellen to pay a living wage. now other people put signs to say we pay living wages. you are right they don't know the difference. once people decide to go out and the sink and will spend $13 for a meal if it is $12.80 you don't notice it
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then is what happens in this city. not that people were big spenders but for another $0.20 they would support living wages and their community. >> would it cut down on waitressing jobs? >> that is the big debates in economics if what really happens is you stop hiring. the evidence is you don't see that. the rate at which it increases slightly like an example of mcdonald's he starts to have the machines were they fill up their own glass but generally speaking
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the recent evidence that shows employment goes down. maybe a little bit but people are willing to say we want to see the workers have a decent wage the restaurant is doing that, a great. that is what happened with whole living wage movement of this is a crisis that you have these discussions in communities where ordinary people got together and most people never thought about what you said. wednesday heard it, then it meant something.
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>> these companies don't pay a living wage. i worked at wal-mart 13 years. i make $12.70 per hour after 13 years. i am entitled from the government i get help with might oil, food stamps, i can get all kinds of help but toupees it? you are. it comes out of your taxes. you helps the waltons get richer. >> that is a great point* to end on. and every video store participating. we have copies of the book.
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thank you for coming. [applause] >> it is not about alexandria virginia but in history when the district of columbia included parts of what is now virginia.
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what went wrong and why it left. one thing i wanted to do is give a sense of what life was like. firefighting worked very differently. crime worked differently, a slave -- slavery played a crucial role and politics were different this was a democratic city. so today for what they think looking back at this time period there was a political position that exist today. to give you a sense of
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alexandria this is where you find the original boundary marker. the other is the dueling grounds that took place between secretary of state henry clay and john randolph. the other place is the infamous slave 10 where we are headed next. we year standing in one of the hidden gems of old town alexandria. located in the basement of the northern virginia durbin they get one time the most prosperous slaves business in america. they would roundups' slaves from all points, virginia, maryland points, virginia, maryland, even delaware and process them and there was a men's
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camp on one side they were not allowed to coaming goal and kept tear until they were sold in large quantities down south or march on foot with the union army invaded it was the slave 10 but to be in the abolitionist time period they came to the basement and found slaves shackled to use the wall. is important in the early history also why alexandria wanted to leave. you would see the business of slavery was a predominant
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were all the money was. so this operation was one of the most successful businesses in alexandria and was so successful the threat posed by the potential out lot of slavery was enough to push the movement forward which was alexandria leaving so played a role in the predominant business and why they wanted to leave the district of columbia. know at the dueling ground in north arlington this is where it happens between secretary of state thises little-known and i have not heard about it but these are
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to you titan's the modern-day equivalent is john kerry verses mark warner. they arrived after randolph gave a speech they ended of having a dual and on the morning of the dual they shot at each other but then they came together but the bullet pierced his coat and he said it is not greater. here we are at jones point. this is the boundary marker laid when the federal government created the district of columbia.
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it looks like a diamond shape that the modern map here looks like a moth has eaten the southern half but it was retroceded back to virginia because it is the original boundary marker. but in 1791 eldridge jerry
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from gerrymandering suggested to possibilities. trenton new jersey and and maryland but then they decided on trenton then they backtracked to approve funding for georgetown and trenton. that they would move to different parts of the year. the virginians to go to great lengths at the potomac. that the man by david stuart was related to washington actually stuart laid the cornerstone with the masonic ritual the compromise of 1790.
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to do with the assumption of debt. says other states had paid off the debt but the northern ones had not. alexander hamilton wanted the government to assume these debts let someone did it the capital on the potomac river. there was of a dinner held at monticello where he invited madison and hamilton had and over dinner federal government would assume the debt in exchange for the capital placed on the potomac river. it was actually the key deciding factor.
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they came to this spot here and had a masonic ritual and they gave speeches here on the spot with a ceremonial laying on the boundary marker that is how the district was created. with the secretary of state what i find a striking is her ability to stay focused as much as possible with what is happening. do